Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division.
Before EVANS and FITZHENRY, Circuit Judges, and LINDLEY, District Judge.
Appellants sued in assumpsit upon the common counts and a special count to recover from appellee a debt of approximately $80,000 owing to appellants by a third party, the Rural Grain Company. The special count sought to recover upon the theory that on and after November 1, 1929, appellee by its conduct held itself out as having purchased the business and assumed the liabilities of said Rural Grain Company and thereby created an estoppel to deny liability for the debt due appellants. Appellee pleaded non assumpsit and lack of liability because of that section of the statute of frauds (Smith-Hurd Ann. St. Ill. c. 59, § 1) requiring promises to pay debts of another to be in writing.
At the conclusion of appellants' evidence, the trial court, upon motion of appellee, directed a verdict in favor of appellee and entered judgment thereon. This appeal followed.
Appellants assign error upon the refusal to admit certain evidence and the court's direction of a verdict.
The facts proved and offered to be proved, all of which, so far as they are competent, we must consider, are substantially as follows:
Appellants, rural dealers in grain and lumber, in various down state cities of Illinois had deposited with the Rural Grain Company, owned by a cooperative company of farmers' elevator companies, securities and cash to the amount of $94,000 and the thereafter purchased and sold through Rural Grain Company on grain or security exchanges commodities and stocks, with the result that on November 1, 1929, the Rural Company owed appellants approximately $80,000.
Appellee was a Delaware corporation, organized to aid in carrying out the purposes and intendments of the Act of Congress, approved June 15, 1929, known as the Agricultural Marketing Act (12 USCA § 1141 et seq.), and operated in conjunction with the Federal Farm Board. Its charter authorized it, in brief, to buy and sell grain; to promote unity of effort by farmers and their associations in marketing grain; to provide and maintain proper "facilities" for "handling and marketing" grain "in any capacity"; to establish physical means for storing and marketing grain; to lend money to farmers' associations, grain sales agencies and "grain pools"; to acquire the rights and property and to undertake the whole or any part of the assets and liabilities of any association or corporation, for the purpose of furthering the grain business contemplated; "to pay for same in cash" or otherwise; to conduct any business so acquired; to exercise all the power necessary or convenient in and about the conduct of such business; and "to do anything that is conducive to carrying out the policy of Congress" as stated in the act aforementioned.
The Rural Grain Company was an Illinois corporation dealing in commodities upon various exchanges. Its capital stock was owned by a third corporation "National Farmers' Elevator Grain Company, cooperative." The Rural Company held membership upon the Chicago Board of Trade. Appellee desired to be admitted to that Board but had been unsuccessful in attempting to gain membership. Chiefly to bring about that end, apparently, appellee contracted on November 30, 1929, to buy from the Elevator Company and pay for the capital stock of the Rural Company. The latter contracted to sell and deliver such stock and to discharge the debts of the Rural Company on or before December 31, 1929. (Later this time was extended to February 1, 1930.) By the same contract the Rural Company contracted to sell and the Elevator Company to buy the bank balances, securities, and accounts receivable of Rural Company. The latter agreed that it would not the consent of appellee, or declare dividends, make expenditures, or incur liabilities, other than as absolutely necessary in the ordinary course of business, without such written consent. By virtue of this agreement, appellee planned to realized its ambition to acquire a seat on the Board of Trade and thus to promote its charter purposes hereinbefore referred to and to carry forward the intendments of the Agricultural Marketing Act.
Each of the parties embarked upon the performance of this contract, but before there was more than initiatory attempt to perform, appellee found other means for admission to the Board of Trade, through a nominee, and by mutual consent the contract was cancelled. In June, 1930, Rural Company became a bankrupt.
The District Court refused to admit the contract, but its contents and that of the charter are mentioned, in order that it may be clear just what power appellee had and what it proposed to do. Appellants make no contention that the contract of itself created any liability upon the part of appellee for the debt due appellants. They insist, however, that what the executive officers of appellee did and said, so far as those acts and sayings came to appellants' notice and were relied upon, was of such character as to bind appellee by way of estoppel. This evidence and the corporate records the court excluded, and it is necessary to consider it with care.
By action shown by the minutes of the board of directors of appellee and by the minutes of the "Executive Committee" and "Board of Managers" of that corporation, appellee was authorized to enter into contracts with the Rural Company and the Elevator Company for the purchase of the capital stock of the Rural Company and its assets.The various minutes offered contain, among other records, the following:
"Consideration of the purchase of the Rural Grain Co. Conference relative to salaries provided the same is purchased by the ...